Commodity surge lifts world equities; dollar falls

NEW YORK (Reuters) - Stocks on major world markets posted their biggest weekly advance since 2011 on Friday, as greater investor appetite for riskier assets propelled gains in equities and a surge in commodities and crude oil prices.

Traders work on the floor of the New York Stock Exchange October 5, 2015. REUTERS/Brendan McDermid

Declines in the dollar, a bullish oil forecast as well as miner Glencore’s (GLEN.L) pledge Friday to slash world zinc output have lifted beaten-down commodities. Brent and U.S. crude oil gained about 9 percent for the week, the biggest weekly percentage increase in six weeks.

The U.S. dollar hit three-week lows against the euro and Swiss Franc as minutes from the Federal Reserve’s September policy meeting showed the Fed in no rush to raise interest rates.

The MSCI all-country world equity index .MIWD00000PUS climbed 0.7 percent for its eighth daily gain. It was up 4.4 percent for the week, its biggest weekly advance since December 2011.

The 19-commodity Thomson Reuters/Core Commodity CRB Index .TRJCRB, a global benchmark for commodities, was up 4.4 percent on the week, its best gain since 2012.

“After a harsh selloff in commodities, followed up by the recent weakness for global equities over global growth concerns, we are now having a risk-on trade,” said Chris Jarvis, commodities analyst at Caprock Risk Management in Frederick, Maryland, referring to investors’ appetite for assets considered riskier such as stocks and commodities.

Zinc jumped about 10 percent in its biggest daily percentage gain in at least 35 years, after the Glencore news. [nL3N1285EM] Glencore shares gained 35.9 percent on the week, their biggest weekly rise since being floated in mid-2011, and doubling from a record low reached only two weeks ago.

U.S. stocks ended slightly higher, though the Standard & Poor’s 500 index put in its best weekly gain of the year. Concerns over the outlook for third-quarter earnings weighed on sentiment Friday. Aluminum company Alcoa Inc’s (AA.N) shares were down 6.8 percent at $10.26 following disappointing results.

“We’ve had a good start to the fourth quarter,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia, but “you had disappointing results from Alcoa yesterday and further reason to take money off the table.”

For the week, the S&P 500 rose 3.3 percent, its biggest weekly percentage advance since December, while the S&P energy index .SPNY climbed 7.8 percent, also its biggest weekly gain since December.

The FTSEuroFirst index of the leading 300 European shares closed up 0.4 percent .FTEU3.

In the foreign exchange market, the euro hit a three-week high against the greenback of $1.13875, and marked its highest percentage gain against the dollar in four weeks, at 1.3 percent. The dollar hit a three-week low against the Swiss franc of 0.95870 franc, while the dollar index .DXY also hit a three-week low of 94.692.

The Fed minutes revealed the extent to which policymakers are concerned that a global economic slowdown might threaten the U.S. economic outlook. Though they said overseas turmoil had not “materially altered” economic prospects, they opted to hold interest rates steady last month.

OIL UP SHARPLY FOR WEEK

Brent crude gained 9.1 percent for the week while U.S. crude jumped 8.8 percent, their biggest weekly percentage gains since late August.

For the day, U.S. crude CLc1 closed up 20 cents at $49.63, the highest settle since late July, while Brent crude LCOc1 ended 40 cents down at $52.65 on Friday.

Oil got a boost overnight after forecaster PIRA Energy Group predicted crude prices would rise to $70 per barrel by the end of 2016.

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Three-month zinc futures CMZN3 were up 10.1 percent on the London Metal Exchange at $1,836 a tonne after Glencore said it will cut production by 500,000 tonnes, a third of its output and equivalent to 4 percent of the world’s production.

Zinc had fallen about 30 percent since May to a five-year low, so the rebound could mark the bottom of the market and the commodities complex in general, some analysts said.

In the U.S. bond market, benchmark 10-year Treasuries US10YT=RR traded up 5/32 in price to yield 2.089 percent. The 10-year yield had briefly risen to 2.138 percent, its highest level in about two weeks.

Additional reporting by Barani Krishnan and Sinead Carew in New York and Jamie McGeever in London; Editing by Nick Zieminski, Bernadette Baum and Richard Chang